I had a friend try to adopt a baby from china many years ago (1990s). He was rejected. The Chinese thought he didn't earn enough to safely raise a kid. They were using a means test designed for US applicants. My friend lobbied to explain all the things he gets in Canada for free, health care being the big ticket item. The Chinese authorities relented and he was allowed to adopt.
My company would happily hand our insurance premiums over to California in return for not having to deal with sleazy insurance dickwads.
So where would the discrepancy in accounting between that and Canada come from? It seems unlikely that the Chinese government would assume that even Americans buy health insurance retail.
They aren't assuming anything. They know that healthcare in the US is hit-or-miss, that it is normally for people to move between having and not having healthcare throughout a lifetime.
>> The new report highlights that 5.5% of children under the age of 19 were uninsured, largely because of a decline in public coverage.
https://www.census.gov/library/stories/2019/09/uninsured-rat...
1 in 20 American kids are uninsured, not counting the undocumented who don't answer the census. That's ridiculous today but it was even worse in the 90s. That's why the Chinese didn't want to give kids to non-wealthy Americans. Uninsured children are almost unheard of in Canada. Only some illegal immigrant children, but even there they have systems in place.
That's a general complaint that has nothing to do with insurance being a cost you pay out of your take-home salary in the US.
Your anecdote seemed to be predicated on an accounting difference between the US and Canada, that the Chinese supposedly didn't know about. I'm saying that doesn't really exist. The sort of people who adopt would have a job with insurance, but the price of the insurance would not be included in their salary.
In my lifetime, I have been uninsured, insured by my employer, on an ACA (Obamacare) plan, etc. But never been in the situation where I was making a good salary and paying full price out of it for a health insurance policy, like people do with car insurance. Nor have I ever known anyone who did. Of course, somebody probably has, somehow, but it's not common, let alone a norm that some government would assume.
The second group may be unprofitable with lower payments, but the insurer doesn't even want the second group, the profits are from decreased expenditures on the first group.
I’m not arguing those other conditions shouldn’t exist, but rather making the weaker, more limited argument considering “given the arrangement of the insurance market as it exists today, what should the price for that insurance offer be?” In other words, “What should a for-profit insurance company do, acting on their own and immediately?” because I think that’s pretty close to the question they’re facing when setting pricing for individual plans.
I think you’re arguing that perhaps health outcomes should not be funded by private for-profit insurance companies and I’d agree, but while it is, this outcome seems grounded in actuarially sound math.
Is Y’s behavior being on average healthier and therefore less costly to insure?
5.5% of children under the age of 19 were uninsured
Most employers in the US subsidize healthcare, but employees still pay. You usually pay X if you are single, a bit more if you are married, and ~2.5X if you are married with children. Each company has negotiated it slightly differently and it also depends on the specific plan and the state you are in.
but that is not all.
You also pay a co-pay ($15-$50) per visit to a doctor and a co-pay for many prescription drugs. In NYC, a pregnancy with my diamond healthplan cost ~$10k
You also pay a deductible (can be $0 to $5000 or more) where you cover the first $X of the annual payments.
Finally, depending on the state you are in (some allow it, some do not) you also pay balance billing. Basically, the hospital/doctor comes up with some surprise figure of how much you owe, they subtract what insurance paid, and you owe the rest. Usually it is nothing. In the case of more complicated things like surgery, it can be thousands.
I only heard of startups doing this. Outside of that you pay x % for healthcare per paycheck the employer covers some other amount. Healthcare might not be socialized but at least I can always find a new provider if I absolutely wanted one just pay out of my own pocket is the only downside. The subsidizing happens for bigger corps usually and negotations between healthcare providers vs insurance companies. The more clients you have the more effective the negotiations.
It is similar in other European countries (at least as far as I can tell from a cursory search showing that sources can’t really agree on what the highest marginal rate is).
I would be interested in seeing a chart of gross to net income and effective tax rate in different countries but this is hard (eg do you count employer payroll taxes? Do you count removal of state’s benefits that might not be used anyway? How do you deal with countries that have more complicated systems with eg deductions or allowances based on personal situations?)
All that said, I think the post you’re replying to could just mean “approximately half,” ands I think 40% would fit that description.
in the U.K. the max marginal income tax rate is 45%
I think income tax was even higher during WW2, but that's pretty much a special case.
[1] If you're paying £15,000 a year in council tax, you must have some kind of gigantic property whose maintenance costs would dwarf that figure anyway.
My effective rate is actually 40%, not 50%. (although this doesn't include VED, fuel duty, insurance tax, alcohol tax, tobacco tax, flight taxes, VAT or any of the myriad of little taxes here and there)
Depends on where and depends how you're counting it.
In Ontario, Canada, and I'm not an accountant so very approximately based on GoC website:
At ~~$150k CAD you are at 29% federal + 12 % Provincial tax.
On anything you buy though you get another 13% VAT
So now we are at 54%, plus CPP and EI.
Plus any other taxes - property, land transfer, etc - overall it's well above 50% for what would be ~100k USD
https://www.taxtips.ca/calculators/basic/basic-tax-calculato... is a good resource - it shows that your effective tax rate in Ontario on $150k gross is 30.3%.
You probably also contribute 18% to your RRSP on that huge salary, which drops your effective tax rate to about 27.4%.
Also, you aren't paying 13% VAT on everything you buy - lots is exempt like food and your mortgage/rent. Even if you spend every dollar of your net income, VAT is probably closer to 8% of your total net income (which is 72.6% of your gross, so 5.8% of your gross going to VAT).
CPP and EI total $3754 in 2020, so that's another 2.5% total.
So that's a total of 35.8% tax on your gross salary. Also note it's much less if you have any common deductions, like children, dependents, education expenses, etc.
Top income tax bracket in BC in 2013: 43.7%
Top income tax bracket in BC in 2014 and 2015: 45.8%
Top income tax bracket in BC in 2016 and 2017: 47.7%
Top income tax bracket in BC in 2018 and 2019: 49.8%
Top income tax bracket in BC starting in 2020: 53.5%.
I believe that there have been similar effects in ON from increases & new brackets, on both the federal and provincial level.
[1] https://twitter.com/cperciva/status/1229900065726054400?s=21
2015 top bracket: "over $151,050"
2019 top bracket: "over $205,842"
So anyone anywhere near that bracket, despite the increased percentages, is probably paying less tax overall.
Again, this is a rough rule that’ll typically be personally conservative, not a precise calculation.
The problems in this country, including the mess that is the tax system, cannot be solved by snarky comments like "donate your money if you think taxes are too low." They require a longitudinal and deep response.
So how does Germany pay for its expansive welfare state? It has a 42% bracket that kicks in at 57,000 euro. In California, the marginal dollar income tax at that level is just 26% (federal plus state). It also has a 20% VAT. In both Germany and the US, the vast majority of income is earned by the bottom 99%. In the US, we don’t tax those people enough.
(Or we tax them what they want to be taxed. I can’t help but notice that while half the country wants European-style social services, nobody is proposing European-style taxes on people making under six figures, or a VAT. Even Sanders promised not to raise taxes on people making below $250,000. The math just doesn’t work. Americans—the bottom 99% that makes 80% of all income—have chosen to be taxed less than Europe in return for less social services than Europe.)
There's plenty of analysis out there showing how the very wealthy in the US pay less effective tax than middle class families. That's not "empty rhetoric". It's a genuine problem and something we should be trying to solve.
Anyone who thinks that low tax rates on wealthy people isn't a problem should also read "Moneyland" by Oliver Bullough.
As to the “very wealthy”—Tim Cook’s tax rate on his $135 million bonus a few years ago was 52%. The people you’re talking about aren’t even ordinary wealthy people: CEOs, movie stars, and the like. What you’re talking about the Warren Buffets of the world that make money through investments. But there’s just not very many of those people. The IMF estimates the global cost of individual tax avoidance at $200 billion per year: https://www.imf.org/external/pubs/ft/fandd/2019/09/tackling-.... Say half that is attributable to the US. That’s about the same as the cost of the deductions for mortgage interest and local property taxes.
Federal, state, and local governments tax more than $5 trillion annually. One party is proposing new spending amounting to several trillion more annually. In the face of those numbers, talking about $50 billion or $100 billion issues with respect to the taxation of the very wealthy is indeed empty rhetoric. You hear a lot of talk about billionaires this and billionaires that. The total income of all billionaires in the US is $130 billion, or about 1% of all income. It just doesn’t matter very much what the tax rate is on people who comprise only 1% of the tax base. Spending 90% of your time talking about tax issues that could fund at most 10% of your proposed new spending is empty rhetoric. Meanwhile, German levels of taxation on the middle class, and a German-style VAT would raise trillions annually. Guess why nobody talks about that.
Capital gains is 20% federal plus state (13% in California)
This is the kind of selective data that makes this subject so infurating to argue about. I'm sure this fact is true. But what you're trying to imply is that Tim Cook's overall tax payments were very high, and that's not remotely true at all! A bonus is one of the few bits of income he has, in fact, that is taxed as routine "income" that the rest of us pay. Almost everything the guy makes is in long term assets, and those are absolutely not taxed at 52%.
Tim Cook shouldn't pay a lower tax rate than I do. And while I don't have numbers for Cook specifically, I'm pretty sure he does. Everyone in that world pays less tax than I do. And they shouldn't.
Most economists agree that capital gains should be taxed lower than ordinary income, which is why most developed countries including social democracies have preferential capital gains rates.
And again, why do you care about the taxation of the super wealthy so much? Even if we taxed capital gains at the level of Denmark (9 points more than California) would raise less than $70 billion a year. Even Warren’s completely bonkers wealth tax (which would have had a top rate four times higher than Sweden did before it got rid of the wealth tax) would have raised only 10% of what Warren was proposing in new spending. Why spend so much time talking about a potential source of revenue that would do so little to actually increase the government’s ability to provide social services—even if we taxed the wealthy far in excess of European countries?
It’s as massive effort in deception. People don’t want to put their money where their mouths are. They want Medicare for All—but only if someone else pays for it. If proponents of these social were forthright in asserting that wealth taxes or whatever would only pay for 10%, and European-style taxes on the middle class would be required to pick up the rest of the tab, support for these proposals would evaporate: https://www.cato.org/publications/commentary/millennials-soc...
> When tax rates are not explicit, millennials say they’d prefer larger government offering more services (54 percent) to smaller government offering fewer services (43 percent). However when larger government offering more services is described as requiring high taxes, support flips and 57 percent of millennials opt for smaller government with fewer services and low taxes, while 41 percent prefer large government.
For what it’s worth, I’m pro paying higher taxes. I’d be happy to pay what people in Germany pay at my tax bracket. But only if middle class taxes also go up. Otherwise, there is no point—we won’t be able to tackle the big ticket items like universal healthcare without the trillions in revenue we could raise through a 10% VAT, a 10% payroll tax, etc.
This is always the retreat: "OK, taxation is unfair, but you can't prove there's a problem so it doesn't really matter, does it?"
I say: taxation is unfair, and we should make it fair instead of constantly trying to justify the fact that the very wealthy (who are, relative to US society, wealthier than they have ever been and getting steadily wealthier) are paying less tax than you or I do. Let's start there.
To wit: why are you so invested in the regressiveness of current taxation policies? Shouldn't you at least accept that we should make it fair?
If it was fair, maybe you'd have an easier time convincing the hippies not to try to pay for your health care or whatever.
Beyond that, taxes are just a means to an end. I accept that taxes are necessary for providing social services. So I find it extremely disingenuous to focus so much on a potential source of tax revenue that won’t cover 90% of what we need to provide universal healthcare, etc. I find it disingenuous when people like Warren talk about Medicare for All (which by her own math will cost $30 trillion over 10 years) and then spend the rest of the speech talking about wealth taxes (which by her own math would raise only $3-4 trillion over that same period), and then also promise not to raise taxes in the middle class. It’s rank manipulation: you’re trying to make voters believe we can pay for these services through higher taxes on the rich, and burying in the fine print the fact that the middle class will have to pay 90% of the bill. (This manipulation also undermines the prospect of us ever getting universal healthcare, because no real plan can achieve that without the massive middle class tax increases you’ve convinced voters are unnecessary.)
The motivation seems to be more focused on taking money away from certain people (because “the billionaires shouldn’t exist” or some such tripe), than raising the money we need to pay for social services people supposedly want, and figuring out how to do that with minimal distortion to the economy. I think that’s a toxic brand of politics. It’s also a departure from what other developed countries are doing. Economists agree that the most efficient sort of tax is consumption taxes, which is why every OECD country relies heavily on VAT. (If our taxation profile was the same as Spain’s, payroll and consumption taxes would go up $2 trillion per year, while income taxes—paid mainly by the rich—would actually go down $1 trillion per year.) So this rhetoric seems both spiteful and empirically unwise.
> The motivation seems to be more focused on taking money away from certain people
I straight up told you what my motivation was, and it wasn't that.
Why? There just too few people in that echelon for higher taxes to make a dent.
So one might think these pushers of more social aid might realize, "ok we have to raise taxes on the middle class to get the funds we need... and introduce a national sales tax (VAT) that everyone, even the poor, must pay."
Do they say that? Do they come to that conclusion?
No, they imstead promulgate ideas such as wealth ceilings: anything you earn over 100 million is taxed 100%. There can be no billionaires.
> No, they imstead promulgate ideas such as wealth ceilings: anything you earn over 100 million is taxed 100%. There can be no billionaires.
I'm sorry... who is saying this? This isn't a serious policy promoted by anyone that I'm aware of.
https://en.m.wikipedia.org/wiki/Maximum_wage
The history section is particularly interesting especially the recent history. I hear this talk all the time on social media.
> Bezos currently pays less tax than I do, and he should at least pay that much, right?
I don’t know your earnings, but let’s assume it’s under $1M annually. I do not believe you pay more in gross taxes than Jeff Bezos. If you paid more, you would likely have $0.00 remaining. What is your source for how much tax he pays? It is likely in the millions.
When Buffet for instance says he pays less in taxes than his secretary he means a a percentage of his total earnings.
I disagree, most wealthy EU citizens I know said they wouldn't mind being taxed more.
Because capital gains, ironically, do not apply to gains in capital assets. They have to "realize" the gains as "income", usually by selling the asset. So a millionaire (stockholder) can become a billionaire without ever paying a cent in capital gains tax. Only when they sell the stock is it subject to taxation.
This allows them to pay tax selectively. Even if they want a chunk of money all at once, they can take a loan against their capital assets. There is no income realized when taking a loan. They then selectively sell stock to pay down the loan, preferably in years when they are taking a loss in some other area, nullifying the taxable gain on the asset sale. Such tricks are why, for billionaires, paying capital gains tax is basically voluntary.
You can grow your wealth without virtually no taxable income. It's real wealth - you can buy houses and yachts with it - but you don't need to pay tax unless you choose to.
In reality most money at this level is made by speculation, and speculation is spectacularly under-taxed.
For example Forex trading in the City of London moves $6.6 trillion of money around, every single day. A Tobin Tax of 0.1% on that would raise $2.5tn a year - which would almost instantly wipe out the UK's entire national debt.
Of course you'd lose some transaction volume - you might earn "only" $500bn - but the principle remains. A lot of economic activity isn't taxed at all, mostly to the benefit of the rich. This has huge effects on the quality of life of most of the population.
There's a principle you won't find in econ books, which is that in an industrial economy basic maintenance spending isn't optional.
If you don't pay for good education, you pay for it in lost economic activity. Likewise for infrastructure. And health care.
The idea that these are somehow nice extras that the population shouldn't expect because they're "too expensive" is so wrong it's borderline insane.
Everyone pays anyway. You may as well organise this properly so the work gets done and prosperity increases, because the alternative is instability, loss of opportunity, and ultimately a real risk of complete social and economic collapse.
Traders can just move money to other trading system, e.g. futures, or they can just stop trading and instantly gain $2.5T a year in saved taxes, which is equivalent of UK's entire national debt!
If you want to capture these $2.5T, you need to close borders and tax these traders physically, one by one, like Soviet Union, China, North Korea, etc.
Apples and oranges comparison. The US government is fundamentally different concept of national government. Between healthcare and the military, US per-citizen spending it far beyond, as European examples, Germany (more than double). In short, the US has to tax more because its government is so much bigger. Add to that the greater wealth disparities in the US, taxes on US rich need to be higher if the US ever wants to climb into the black.
Germany: 399 billion / 83 million people = ~$5,000/person/year
US: 3.8 Trillion / 328 million people = ~$12,000/person/year
It seems reasonable to point out that there’s another direction we could go to solve that imbalance. (Could be across the board or in certain categories.)
>US: 3.8 Trillion / 328 million people = ~$12,000/person/year
Apples and oranges comparison. The US subsidies most EU militaries. NATO spending is a great example. US is the only member who actually fulfills their obligations.
Basically GP is more right than you
If everyone gives more money, we can actually make things better.
I am willing to pay more taxes if it actually helps, which is why I will only give more when we make everyone give more.
Some people believe that giving less = actually make things better because it will limit the bad things a government can do.
When it comes to healthcare, the vast weight of the evidence supports strong government intervention in healthcare. When examples of profit driven healthcare exist, the vast weight of the evidence would lead you to conclude that it is less efficient and more expensive, delivering worse outcomes for higher cost.
on edit: changed libertarians to Randians.
I was just arguing against the idea of 'you just pay more taxes if you want to' being a solution.
I will only give more when we make everyone give more
Only government legislation is working. It is people pushing for it, but they still mostly have the same mentality of "I will only do X when everyone does X".